SBP Mulls Over Opening LCs for Fuel Imports

The issue of pending/blocked letters of credit (LCs) for oil marketing companies (OMCs) and refineries will soon be resolved as the country runs low on fuel stock.

Minister of State for Petroleum Musadik Malik will meet the Governor of the State Bank of Pakistan (SBP) today to discuss the priority opening of LCs to timely import petrol, an Energy Ministry official told reporters.

The petroleum minister is expected to brief the SBP governor on the country’s current POL stocks and plan the opening of LCs on an urgent basis.

The Petroleum Division last week wrote to the central bank governor to highlight the country’s limited fuel stock. The SBP was asked to establish 32 LCs for refineries (PARCO and PRL) and OMCs (PSO, GO, Hescol, BE, TAJ, PUMA, APL, EURO, and Flow) to ensure petroleum product imports.

When the country was not facing the LC crisis, 4-5 petrol cargoes were typically imported, which has now been reduced to 1.5 cargoes. Pertinently, PSO, GO, and Shell petrol cargoes are currently expected to soon arrive in the country. PSO is importing 50,000MT of cargo while GO and Shell’s cargo will be smaller, but the arrivals will be enough to keep things running smoothly for a fortnight.

Under the first priority list, DG Oil recommends that SBP establish 23 credit letters for crude oil and mogas imports. Under this heading, PARCO requires the establishment of LCs in order to import two cargoes of 535,000 barrels each from ADNOC, one on January 13 and the other on January 19.

PRL also requires the LC to be opened in order to import 532,000 barrels of crude oil on January 30-31.

PSO and other OMCs require the prompt establishment of LCs for the import of two cargoes containing 50,000 metric tons of mogas, with one scheduled for January 26 (tomorrow). To import six mogas cargoes, GO requires the opening of six LCs, BE requires four LCs, TAJ and HPL require two LCs, and PUMA, APL, and Flow require one LC each.

The second priority list calls for the establishment of 5 credit letters for the import of high-speed diesel, while the third priority list calls for the establishment of 4 LCs for the import of lubricants.

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